Exits and M&A

Exits and M&A are the routes by which venture-backed startups turn their investors' stakes into cash or public shares: initial public offerings (IPOs), sales to acquirers and, for companies that fail, court-supervised asset sales that can leave investors with little or nothing. In 2026 the exit window reopened with the largest IPO and the largest acquisition of a private venture-backed startup on record, both by SpaceX, while strategic buyers agreed to pay billions in stock for AI and security startups.

SpaceX's listing at a $1.77 trillion valuation anchored a record quarter for US IPOs, and Oura's planned IPO was structured mainly to sell existing shareholders' stock. Acquisitions still made up most exits: SpaceX bought Cursor for $60 billion, and AMD, IonQ and SAP agreed to buy World Labs, Elisity and TechWolf. Character.AI marked the other end of the market, filing for Chapter 11 three years after a $1 billion valuation, with Disney bidding $20 million for a licence to its intellectual property. As of October 2026, the AMD, IonQ and SAP deals were pending, each expected to close by the end of the year, and Character.AI expected its court-supervised sale to close by late November or early December.

Public listings

SpaceX listed on 12 June 2026 at a $1.77 trillion valuation, which Crunchbase counted as the largest IPO ever completed. The listing reopened the exit window and anchored a record $104.8 billion quarter for US IPOs, and SpaceX's newly listed shares later paid for its purchase of Cursor.

Oura's IPO was built mostly as a sale by existing shareholders. In its September 2026 prospectus, Oura sought up to $2.2 billion at a fully diluted valuation of $15.62 billion, but existing stockholders were selling 36.5 million of the 50 million shares on offer, and Oura would receive none of the proceeds from those. Forerunner Ventures, its second-largest shareholder since leading its 2020 Series B, planned to sell about 28.7 million shares, worth about $1.2 billion at the $42 midpoint. Most of the roughly $532.6 million Oura stood to raise for itself was earmarked for tax bills tied to employee equity vesting at the IPO.

Strategic acquisitions

Acquisitions were the main route out, accounting for nearly 68% of startup exits in the first quarter of 2026. Days after its June listing, SpaceX agreed to buy AI coding platform Cursor for $60 billion, the most ever paid for a private, venture-backed startup. The merger with Cursor maker Anysphere took effect on 14 August 2026.

Elon Musk later described the deal as a purchase of coding training data rather than of the product, naming OpenAI, Anthropic and Cursor as the only three organisations with enough of it to build a "compelling SI." Two days before the close, the model card for xAI's Grok 4.6 disclosed "supplemental training on anonymized Cursor workflow data." The deal also cost Cursor a model supplier: OpenAI said it would wind down its contract to supply models to Cursor, ending developer access on 12 November 2026, and cited Musk's companies' record of violating contract terms.

Other strategic buyers agreed to buy AI and security startups, two of them companies the buyer had already invested in. AMD agreed to buy World Labs, Fei-Fei Li's startup building world models (AI that generates 3D physical environments), for $8.2 billion in stock. AMD had backed World Labs in a roughly $1 billion February 2026 round alongside its rival Nvidia. SAP, one of TechWolf's strategic investors, agreed to buy the Ghent-based workforce AI startup for an undisclosed sum. TechWolf and Tech.eu called it the largest acquisition of a venture-backed software company in Belgian history.

IonQ agreed to acquire Elisity, a network security startup whose Zero Trust tools contain attackers inside breached networks, for up to $1.3 billion in stock, including up to $150 million in earnouts. Elisity had raised about $78 million, and the deal would give its backers, led by Insight Partners, an exit. IonQ's shares fell more than 9% on the announcement. CNBC tied the drop to investors weighing the dilution from an all-stock deal against its strategic rationale. All three deals were subject to regulatory approval, with AMD's expected to close by the end of 2026 and IonQ's and SAP's in the fourth quarter.

Distressed sales and licensing

Not every exit returned capital. Character.AI filed for Chapter 11 bankruptcy on 12 October 2026, listing estimated liabilities of $50 million to $100 million. Disney emerged as the lead bidder, offering $20 million for a non-exclusive, perpetual licence to certain Character.AI intellectual property and to provide transition support through former Character.AI staff it had already hired.

Character.AI's backers had taken part of their exit earlier. Andreessen Horowitz led its $150 million Series A in 2023 at a $1 billion valuation, and in 2024 Google paid about $2.7 billion to license its technology and hire back co-founders Noam Shazeer and Daniel De Freitas, a deal that let early investors cash out part of their stakes without a traditional acquisition. With liabilities well above the size of Disney's bid, later-stage backers stood to recover little or nothing from the remaining assets. Character.AI said it would keep operating while the court-supervised sale ran, with a target close of late November or early December, and that the platform would be wound down if no acceptable bid emerged.